By Atom MarkarianA senior government official dismissed on Tuesday World Bank calls for a liberalization of Armenia’s civil aviation sector, saying that exclusive rights enjoyed by a local private airline are vital for national security.
The Armavia airline was given a 10-year right to carry out most of the flights to and from the country in 2003 following the collapse of Armenian Airlines, the state-run flagship carrier. The company has since been the dominant player in the market, helped by the Armenian government’s refusal to open it to greater competition.
In an extensive report on economic conditions in Armenia released last summer, a group of World Bank experts concluded that this protectionist policy is primarily responsible for the continuing high cost of air travel, a key obstacle to the development of the Armenian tourism industry.
One of the experts, Doug Andrews, made a case for an end to the aviation monopoly and the adoption of an “open skies” government policy that would enable foreign airlines to compete with Armavia on equal terms. Speaking at a roundtable discussion of the World Bank report in Yerevan, he said market liberalization would also help to attract low-cost carriers increasingly popular around the world.
“Our core the argument is that open skies policy is better,” Andrews said. “The benefits of the low-cost carriers have been seen throughout the Western world and are starting to come more and more into developing countries.”
But Artyom Movsisian, the head of the government’s Civil Aviation Department present at the discussion, rejected the idea, saying that Armenia’s “national security” outweighs the benefits of significantly lower air fares. “A foreign airline may refuse to fly if there are security risks here such as gunshots at the border,” he claimed. “Many states are interested in having their own carriers for the sake of national security. There isn’t a single state that doesn’t protect its carriers.”
Movsisian also argued that Armavia undertook important obligations in return for securing the lucrative flight rights. “Those exclusive rights were given on the condition that it employs local pilot staff, pays our state $1 million a year and does not reduce the frequency of its flights,” he said.
Armavia’s principal owner Mikhail Baghdasarov is wealthy businessman close to Defense Minister Serzh Sarkisian. A Russian citizen of Armenian descent, he is one of the main importers of fuel to Armenia.